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Highlights:
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B. Riley Financial has entered into a definitive agreement with Oaktree Capital Management to form a partnership in Great American Holdings, referred to as Great American NewCo.
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The transaction, valued at $386 million, includes cash payments, preferred units, and common units to enhance ownership structure.
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The partnership aims to reduce B. Riley’s debt while leveraging Oaktree's expertise to drive growth for Great American Group’s services.
Description:
B. Riley Financial {NASDAQ:RILY} has announced a definitive agreement with Oaktree Capital Management to establish a partnership in Great American Holdings, known as Great American NewCo. This strategic transaction is valued at approximately $386 million and marks a significant step for B. Riley as it seeks to enhance its financial positioning and growth potential.
As part of the agreement, B. Riley will contribute its Great American Group businesses to the newly formed entity. The transaction structure includes B. Riley receiving $203 million in cash, along with Class B Preferred Units that carry an initial liquidation preference of $183 million. Additionally, B. Riley will hold Class A Common Units representing a 47% ownership stake in Great American NewCo.
Oaktree Capital Management will acquire Class A Preferred Units and 53% of Class A Common Units for $203 million. This partnership is anticipated to close in the fourth quarter of 2024, pending necessary regulatory approvals.
The primary objective of this partnership is to reduce B. Riley’s debt while maintaining equity upside through its significant ownership stake. Furthermore, leveraging Oaktree's extensive expertise in financial management and investment strategies is expected to enhance growth prospects for Great American Group’s services, positioning the new entity for long-term success.
The collaboration with Oaktree underscores B. Riley’s commitment to optimizing its capital structure and focusing on strategic initiatives that drive value creation. By combining resources and expertise, the partnership aims to strengthen the operational capabilities of Great American Group, ensuring a robust platform for growth in the future. This transaction reflects B. Riley's proactive approach to navigating the evolving financial landscape while enhancing its service offerings and market competitiveness.
